Breaking Down the EU Carbon Border Tax for Global Trade Professionals

The European Union’s regulatory regime on environmental, social & governance (ESG) issues, particularly on carbon and sustainability, is the most comprehensive in the world. From encouraging decarbonization, to legislating ESG in the financial services industry, and requiring companies to report on ESG commitments and measurements, the E.U. regional authority seeks to provide a regulatory framework for the world to adopt as a standard.

This also remains true for its commitment to decarbonization of imports into the region called the Carbon Border Adjustment Mechanism (CBAM). It is a regulation that establishes a fair price on carbon emitted during the production of carbon-intensive goods that are at risk for carbon leakage — such as cement, iron and steel, aluminum, fertilizers, electricity, and hydrogen — that are entering the E.U.

• CBAM is a part of a larger commitment to decarbonization
• Key steps to compliance are known, but questions remain

Source: Thomson Reuters

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